William Strong, former co-chief executive of Morgan Stanley (NYSE:MS)’s Asia-Pacific division plans to join a litigation finance start-up, Longford Capital, as its chairman. Strong’s retirement from Morgan Stanley was announced last month. William Strong, who turned 61 a few months ago, will also become a partner of Longford, and will begin his new job on May 1. Analysts say William Strong’s most important job will be to utilize his 35-year career in finance professional network to bring business to Longford. The start up just invested in its first litigation in 2013.
It turns out William Strong has already invested some of his own money in Longford. William Strong put up seed capital for Longford early last year after discussions with William P. Farrell Jr., a well-known litigator and friend of William Strong who co-founded the firm.
Litigation finance is a new field and just a few firms have popped up over the last few years. The basic idea is to become involved in legal disputes among businesses where one of the parties needs immediate cash or has decided to hedge the risk of losing the case. Litigation finance firms such as Longford agree to pay for a portion of a case’s legal fees in return for a specified share of any awards related to the case. If they back the loser of the case, the litigation finance firm typically gets nothing.
The litigation finance business is more well-known in Australia and Britain, but has become more popular in the U.S. after a number of big-time attorneys began backing plaintifffs in lawsuits. The two largest litigation finance concerns — Burford and Juridica Capital Management — have hundreds of millions of dollars in their war chests.
Statement from William Strong
“It’s a new, exciting asset class that is uncorrelated, where the demand for the capital greatly exceeds the supply,” William Strong explained enthusiastically in an interview last week. “It looks as though the returns in the asset class are very, very attractive.”
William Strong also said while he understands the industry is still young, he saw the possibility in the future for the securitization of these litigation finance claims. Longford plans to invest in a variety of business claims in different industries, with claims ranging from $25 million up to $1 billion.